By Suzanne Barlyn
NEW YORK (Reuters) – Financial institutions that settled misconduct charges with New York State’s financial regulator have committed new improper behavior and “serious compliance failures,” the agency’s head said on Wednesday.
Monitors keeping tabs on the institutions discovered intentional misconduct, including improper foreign exchange trading practices, right up to the present day, said Maria Vullo, superintendent of the New York State Department of Financial Services. She declined to name the banks.
The department oversees banks in the state, including branches of some of the world’s largest financial institutions, and can revoke their licenses for doing business.
“Some of the discoveries are very troubling,” Vullo said during a forum for legal and compliance professionals in New York.
“There could very well be enforcement actions,” she told Reuters on the sidelines of the event.
The misconduct coming to light was not part of the regulator’s initial investigations, Vullo said. The remarks were her first since the state Senate confirmed her last week to lead the agency.
The agency first plans to work with the institutions in question to impose safeguards and improve the culture that led to the misconduct and compliance failures, Vullo said.
The department is involved in about 12 cases in which monitors have been appointed to check up on whether financial institutions are complying with settlement terms.
Some of those monitorships overlap with others imposed by a number of authorities, including the U.S. Department of Justice, that are involved with certain cases along with the state agency.
Cases involving multiple authorities include agreements last year with Barclays Plc, which agreed to pay a total of $2.4 billion to settle allegations of foreign exchange manipulation by the U.S. Department of Justice, Commodities Futures Trading Commission and Federal Reserve, as well as the New York regulator. Barclay’s was also fined a record 284 million pounds ($441 million) by Britain’s Financial Conduct Authority.
Vullo declined to comment on whether other authorities or regulators had reached conclusions about misconduct that are similar to those of her agency.
Her remarks follow a U.S. monitor’s findings that HSBC Holdings Plc had not done enough to thwart money laundering, despite making significant progress since reaching a landmark 2012 settlement with U.S. prosecutors. [L2N1741TH]
On another front, the regulator is close to releasing a revised version of rigorous anti-money laundering regulations it proposed last year, Vullo said.
Vullo signaled that the regulator may soften a provision that could result in criminal penalties for compliance officers who file incorrect or false certifications about the effectiveness of their firms’ anti-money laundering systems.
While compliance officers can still be held accountable, the regulator also plans to consider steps that compliance officers take to uncover problems, Vullo said during the forum, organized by Exiger, a New York-based compliance consultancy.
(Reporting by Suzanne Barlyn; Editing by Lisa Von Ahn and Andrew Hay)